The UK is the first EU member state to complete transposition of the Accounting Directive’s country-by-country reporting rules for the extractive industries. Greeting this major step in the fight against corruption and global poverty, UK members of the Publish What You Pay civil society coalition commended the UK government for honouring the Prime Minister’s 2013 G8 Summit pledge to “quickly implement” the EU Accounting and Transparency Directives.

Under the regulations, large and EU-listed UK-registered oil, gas, mining and forestry companies must report their payments to governments worldwide annually from financial years starting from January 2015, country by country and project by project. This follows a three-year legislative process since the European Commission first proposed country-by-country company disclosure in October 2011. The first company payment reports will be published in 2016.

Miles Litvinoff, Publish What You Pay UK Coordinator, said: “The UK’s leadership will help lift hundreds of millions of people out of poverty and establish a global transparency standard for natural resources. Well managed and properly accounted for, oil, gas and mining revenues will significantly boost poor countries’ investment in health, education, social development and economic diversification. Key provisions in the regulations require project-level payment reporting, and the UK government has committed to publishing the reports as open data.”

Campaigners in developing countries have welcomed the UK regulations. Faith Nwadishi, Publish What You Pay Nigeria National Coordinator, said: “These laws are a huge step forward for transparency in Africa. We will be able to find out exactly how much money companies like Shell pay to our government on a project-by-project basis. This will help us hold these companies and our governments to account so that local communities benefit from our natural resources.”

UK-registered extractive companies required to report under the regulations include Anglo-American, BG Group, BP, Rio Tinto and Shell. The EU’s 2013 Transparency Directive requires the UK to apply the same disclosure obligations to London Stock Exchange-listed companies such as BHP Billiton, Glencore-Xstrata, Total, Gazprom and Sinopec. The Financial Conduct Authority is amending the LSE’s Disclosure and Transparency Rules for this purpose.

“Transposition of these EU transparency rules in all 28 EU member states will help create a level playing field for business,” said Litvinoff. “Similar disclosure rules are already law in the US – with implementation expected next year – and in Norway, and are being introduced in Canada. France is not far behind the UK.”

Nwadishi added: “We look to other EU member states to introduce their own strict reporting rules as soon as possible, and to the United States Securities and Exchange Commission, which has delayed implementing US Dodd-Frank Act Section 1504 for over four years, to act promptly.”

EU and US transparency laws cover 65 per cent of the value of extractive companies in the world’s major capital markets, including Chinese, Russian, Brazilian and other state-owned companies. With equivalent reporting requirements in Canada, 84 of the world’s 100 largest oil and gas companies and 58 of the world’s 100 largest mining companies will be required to report country- and project-level payments.

While warmly welcoming passage of the UK regulations, civil society is concerned about certain paragraphs in draft reporting guidance that industry groups have published for consultation, which are intended for UK government endorsement. “Our understanding is that the current draft guidance contains a faulty legal interpretation and offers misleading advice to companies in relation to project-level reporting and to alleged ‘conflicts of law’ and ‘confidentiality’ issues. If these elements remain unchanged they will contradict the legislative intent of the EU Directives and undermine the excellent work to date by the UK government,” concluded Litvinoff.

Replies to This Discussion

To be most effective, it should also cover all handouts the companies give to individuals (mostly officials in the Governments of developing countries) in the form of material and/or cash handouts and/or personal shares for extra-favorable terms at the expense of generations in the developing countries in return.